Is the social market economy still relevant? If you believe the representative polls, the answer is yes. In recent years, the attitude of the population to our economic order has developed positively. In 2018, even half of them did not have a good opinion of the social market economy, but the situation turned in their favor during the corona crisis. Now, according to Allensbach, approval is 56 percent. ^
A nice compliment on the 125th birthday of Ludwig Erhard this Friday, the political father of our economic system. At the same time, the ebb and flow of approval from the social market economy shows that the economic system must also continue to develop and test indefinitely.
The current positive assessment of the population is certainly also closely related to the economic aid provided by the state during the pandemic and is by no means unquestioned, especially as the number of dissatisfied people in the society is growing, because the coronation protests are not the first. to show.
It is the responsibility of all democrats to adapt the regulatory framework to new challenges and changing conditions. Politics, business, science, associations and political foundations must see this as an ongoing task.
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Although the social market economy has guaranteed our country social security and prosperity for many decades, it is not rigid. Some of the omissions are hard to miss, the cracks in social approval are recognizable and must be resolutely addressed.
The state cannot run into endless debts
“We have a duty to think in terms of generations and build a solid foundation for our children and grandchildren for a happy future,” wrote Ludwig Erhard in his book Prosperity for All. This sentence remained valid more than 60 years later. Contrary. From the point of view of financial policy, this means: as appropriate and necessary as the suspension of the debt brake due to the corona crisis in 2020 and 2021, it must apply: the state cannot take indebtedness indefinitely.
The debt brake provided for in the Basic Law must come into force again – out of accountability to future generations and in order to be able to act in the event of other possible crises. With expenditure in mind, therefore, prioritization and priority should be given to infrastructure projects in the analogue and digital areas
What applies to public finances also applies to the way we live and do business.
We must not diminish the chances of future generations. The founding fathers of the social market economy were shaped by Catholic social doctrine and Protestant social ethics: from the very beginning they had the protection of creation in mind. In this respect, the social market economy has always been a brace linking the principle of economic freedom with the principles of social balance and ecology.
Transformation is a long-distance run
In the 21st century, in times of climate change, digitization and transformation, the social market economy faces increasingly complex challenges, both national and international. For the future acceptance of our economic order, it will therefore be important whether we manage to shape this change in an economically reasonable and socio-politically sensitive way – that is, fair.
The necessary structural change requires the joint effort of politics and business, science and society. This transformation is far-reaching, providing design opportunities, opportunities and threats. Economic opportunities should be mentioned and everyone should be guaranteed the opportunity to participate. Understandable fears and uncertainties must be tackled convincingly.
Transforming an industrialized country into sustainable development requires, on the one hand, long-term binding goals and, on the other hand, adequate freedom in terms of methods and instruments. Businesses and investors, as well as consumers, need planning security. At the same time, given the rapid pace of technological change, we must be open to new developments and innovations.
Use the opportunities faster than before
They are critical to our future international competitiveness. Prosperity for all requires investment in education and research – that is, sustainable development in the best sense of the word. Entrepreneurial freedom is not unlimited, it results rather from responsibility for the common good and society. The basic principle of the social market economy is the protection of competition.
Here a particular challenge arises for digital communication networks as well as for long-term climate and environmental policies: the binding nature of their goals must be combined with a high degree of openness to innovation, individual responsibility and competition for the best solutions. The energy transition – which we are striving for in Germany – is an example of this: Innovative solutions for climate-friendly forms of generation, use and storage of energy compete with each other, and CO2 prices give emissions a price and those actors who use low CO2 Manage emissions, create advantages competitive.
Our country will remain competitive if it takes advantage of the opportunities offered by technological progress – faster and better than before. In too many areas of our society, we are lagging behind and promoting digitization sufficiently – the crown pandemic is ruthlessly revealing this.
The guiding principles are freedom and responsibility
From the very beginning, Ludwig Erhard advocated the free movement of goods and capital. He strove for multilateralism, to “overcome protectionist and nationalist mental shortness.” In light of international events and growing protectionism worldwide, a commitment to open up markets, more international free trade agreements and to reform the World Trade Organization is more than ever on the agenda, especially for Germany as an exporting country. This is all the more true since on January 1, 2022, the People’s Republic of China concluded the world’s largest free trade agreement with 14 other Indo-Pacific nations, which of course does not fully meet the demand for free trade.
“By implementing the principle of the social market economy, you become […] they have to adapt to changing conditions, ”as Konrad Adenauer put it in 1946. Ludwig Erhard would certainly agree. Today and in the future, we must continue to develop our economic system – shaped by the guiding principles of freedom and responsibility, subsidiarity and solidarity – both nationally and internationally, in line with the successful model of the social market economy.
Only if we apply the unchanged principles to changed challenges and conditions, and question achievements and claims self-critically, can we achieve what Ludwig Erhard wanted and made possible: prosperity for all.
Authors: Hildegard Müller is chairman of the jury of the “Social Market Economy Award” of the Konrad-Adenauer Foundation and President of the Automotive Industry Association. Prof. Norbert Lammert is chairman of the Konrad Adenauer Foundation and chairman of the German Bundestag in 2005-2017.
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